Conflicts of Interest: Part II

Here is the next installment in the discussion of the Rasky Baerlein/Ann Carter/Boston Archdiocese conflict of interest. As you may recall from Conflicts of Interest: Part I , Rasky Baerlein is the long-time PR firm for the Archdiocese, and there are some aspects of their relationship with the archdiocese that appear inconsistent with good governance of any organization, whether it be Catholic or secular.

We mentioned in Conflicts of Interest: Part I that Ann Carter , CEO of PR firm Rasky Baerlein, played a key role on the archdiocesan search committee that hired Chancellor Jim McDonough, and was previously on the Board of Abington Bank when Jim McDonough was the bank’s CEO. Ms. Carter joined the Abington Bank board in 2002 for a two-year term, and her term was extended to 2006 by a shareholder vote in July 2003. (She chaired their Audit Committee during the same time period when the bank was restating their 2001 earnings and revising 2002 financials due to an accounting error). According to Abington Bank’s July 2003 annual shareholder meeting financial disclosure, Carter held 12,400 shares of stock (or .32% of the shares outstanding). Jim McDonough held 244,665 shares or 6.28% of the stock. (These shares are often given as an outright grant to board members, or as options to purchase stock at a pre-determined price). What that means is that when Abington Bank sold to Seacoast in June of 2004 for $139.4 million, it is fair to estimate that Ms. Carter’s shares were worth .32% of $139 million or about $450,000. If these share were granted to her as a board member, then that would have been all profit for her. Mr. McDonough’s shares would have been worth about $8.7 million. Within months, even before that acquisition was even complete, Seacoast sold itself to Sovereign Bank for $1.1 billion. So, those shares worth $450,000 in June of 2004 were worth even more in the subsequent sale months later, but we do not know how much more.

What is important for you to know is that in late 2004-mid 2005, Ms Carter made a substantial amount of money on the sale of Abington Bank by virtue of Jim McDonough having her serve on the Board, and then in December of 2005, Ms Carter (who is also a friend of Jack Connors) was put on the Archdiocesan search committee and played a key role in hiring Jim McDonough as Chancellor. His appointment was announced on June 5, 2006. As we stated previously, she was also on the search committee that selected communications secretary, Terry Donilon. Both of these cabinet officials have decision-making authority over how much Carter (the person who helped select them) would be paid for work by the archdiocese. We have been told by several sources that staff members at the archdiocese objected to this conflict of interest, but were overruled, and we have been told that their concerns at the time were overruled by current Secretary for Healthcare and Social Services, Fr. Bryan Hehir.

In addition, we know that Rasky Baerlein PR services are used by four different groups in the Archdiocese corporation sole—the Communications secretary (Terry Donilon), the Office of the Delegate (that handles sexual abuse claims), Caritas Christi, and Catholic Charities. But Rasky has a billing arrangement where they charge each entity separately and where the archdiocese does not aggregate those four separate charges to show if the annual payments were to make Rasky Baerlein a “top-paid vendor” in the archdiocese’s annual report. Hypothetically speaking, if each entity were to pay Rasky $25,000/month for services, the Archdiocese would be paying Rasky $100,000/month or $1.2 million annually, but it would not show up on the annual report as a “top vendor” because the charges are billed to four separate agencies. Even if that is an acceptable accounting practice, it would defeat a purpose of giving transparency to top vendor charges when ones like this are excluded from the archdiocese’s annual report. We do not know the actual amount Rasky is paid and welcome the archdiocese clarifying for us the exact amount of the Rasky billings. If we are mistaken they would be a top vendor we will make an appropriate correction.

It is difficult to understand how the Communications Secretary and Chancellor–who owe their current jobs at least in part to Ms. Carter, who served on their search committee amidst a clear conflict of interest–could responsibly decide on how much to pay her and her firm today, or even on whether to continue using this firm vs other less expensive PR agencies. This conflict of interest also raises major questions over whether all qualified candidates were objectively considered by the search committees for these roles, and how many qualified candidates may have been passed over. Furthermore, it is difficult to understand how this arrangement benefits the archdiocese today, and it is also difficult to understand how failing to disclose the aggregate amount paid to Rasky by the various archdiocesan agencies is consistent with the stated goal and principle of financial transparency. Twenty one positions were recently eliminated at the archdiocese to save money. Healthcare benefits to priests have been cut. The clergy and employee retirement funds are underfunded by tens of millions of dollars. Parishes are being asked to give a mandatory 18% of their contributions to the archdiocese. Something does not feel ethically right about this arrangement with Rasky Baerlein and Ann Carter.

We will email all of the parties involved in this from the archdiocese and ask them to disclose why this conflict of interest was permitted, why the arrangement remains in place today where people even somewhat indebted to Ms. Carter decide on how much her firm is paid for services, and what steps are being taken to immediately address these conflicts for the common good of the archdiocese and to restore trust with priests, chancery workers, donors, and laity. If any readers would like to add more to this, we invite you to comment below or to send us confidential email at (bostoncatholicinsider@gmail.com).

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This entry was posted on Thursday, July 22nd, 2010 at 7:51 am and is filed under Conflicts of Interest, People. You can follow any responses to this entry through the RSS 2.0 feed.
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5 Responses to Conflicts of Interest: Part II

The Chancellor has installed his own people in positions of power, and moved a large percentage of the veteran employees out. This ensures that the institutional memory is short. Also that those now in place are only loyal to him. A textbook corporate takeover by the Chancellor and his backers. Have a nice day.

Thank you for the painstaking work you have put into this. A well-documented post presents the kind of material that could make fair-minded people at higher levels take notice and take action. (Let us hope and pray.)

There were a lot of long-term and loyal employees that were forced out. It’s interesting that the place has actually gotten worse with all of the McDonough clones now there. If he wanted butt kissers, he certainly has a stable full of them.

Somewhere, there should be a balance between Christianity and good Business practices. Right now neither christianity nor good business practice exists. There are just a lot of well-paid incompetents on the staff.